Akbank Chief: New Government Should Explain Monetary Policies

Criticizing monetary policy measures, implemented since late 2010 to cool the Turkish economy, the general manager of Akbank says the new government should clearly explain these policies. The current precautions are focused on ‘micro issues’ and the bigger picture is ‘distorted,’ says Ziya Akkurt

Investors are also confused over Turkish bank stocks’ performances, Ziya Akkurt said.The soon-to-be-established Turkish government should clearly define measures to cool down the economy, according to the general manager of Akbank, the top lender in market value.

Investors are also confused over Turkish bank stocks’ performances, Ziya Akkurt said, warning that funds are “shifting to countries like Russia.”

“Measures only aiming at the banking sector are insufficient. Fiscal measures are also needed,” Akkurt said, speaking to reporters on the sidelines of a press conference Friday. Policies “should be transparently defined by the new government and everyone should be a participant in the issue.”

Responding to a question over the poor performances of banking stocks, Akkurt said investors are “confused” over proposed and implemented measures. “Banking is the key sector of the Istanbul Stock Exchange. Since November last year, funds are shifting to other countries such as Russia.”

Banking shares falling

Policies of the Central Bank and the banking regulator have hit banking shares hard. Akbank stock has shed over 15 percent since the start of the year. In the same period, Garanti Bank shares fell nearly 12 percent, Yapı & Kredi Bank shares dropped more than 21 percent and Vakıfbank shares by 13 percent.

Foreign funds will inevitably flow into countries like Turkey, but what’s important is to “keep them in the domestic market” and “to be able to make use of them,” according to Akkurt.

“As a result, profits of the banking sector, which is one of the main engines of the Turkish economy, have decreased,” he said. “This is not a good situation. Banking should remain profitable and increase the capital.”

“One half of the economy is finance sector and the other half is the real sector. If one half weakens, this automatically affects the other half,” he said, adding that the sector should be supported.

The top banker also asked that policies, in place since 2009 to encourage consumption, should be restrained a little bit. “It is we who both increase and decrease domestic demand.”

Commenting on Turkey’s current account deficit problem, Akkurt said the increase of export income is a crucial factor to reduce the gap. “The increase in Turkey’s exports has still not reached the desired level. Exports should be supported with increased effort to order to cut the current account deficit.”

Measures taken toward “a single group” will not give the desired results, Akkurt said, adding exports boost both foreign currency inflows and production. “Thanks to foreign demand, the economy was able to protect itself from inflation until 2008; it was not due to domestic demand.”

June 17, 2011
SOURCE: Hürriyet Daily News